Fundamental analytics

European currency rally continues, as Eur / Usd tests 1.2135

Today, the currency market is discussing one main story - an impressive European currency gains. The euro began a week consolidating its recent profit, but after the report of the ECB meeting last month, the European currency continued to rise. The positive perception of the readiness of the European regulator to accelerate the curtailing of the support program led to an increase of 0.7% and brought the pair Eur / USd above $ 1.20. Today, growth continued after the news that a preliminary deal had been initiated between the CDU / CSU and the SAP in Germany, with the aim of initiating negotiations on the creation of a government coalition.

The euro rose to a maximum in September last year at about $ 1.2090 and is approaching the 50% drop from mid-2014 until the end of 2016, which is in the region of $ 1.2165. The rollback of 61.8% is closer to $ 1.26.

If the euro rally continues, this will ease the inflationary pressure that is key to the position of the ECB. A stronger euro will also weaken the growth of profits of international companies. At the December ECB meeting it was clear that the economic evaluation of the regulators improved. A number of officials seem to have confirmed this in their public statements.

Draghi said at his last press conference: "In general, the general discussion today reflects a growing confidence that we are seeing the approach of inflation to a sustainable course in the medium term and to our goal."

Domestic statistics on the United States will be of key importance today. Data on the consumer price index (forecasted to increase by 0.2%) and retail sales (projected growth of 0.4%) will be of decisive importance for the movement of the market. But it is unlikely that these data will have a long-term impact. Next week we are expecting a large statistical block from the UK, and possibly important political news from this country.

Brent crude oil reached its goal at $ 70 per barrel and quickly returned to the mark in the 69 $ area. It can easily be explained by technical moments (the presence of a large number of those wishing to fix profits at the level of $ 70), while the fundamental background in the market remains moderately positive and favorable for the further growth of quotations.

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